NNUP Nocopi Technologies Inc MD (QB)

 

 

United States

Securities and Exchange Commission

Washington, D.C. 20549

 

Form 10-Q

(Mark One)

 

☒  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934.

 

For the quarterly period ended June 30, 2024

 

or

 

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934.

 

For the transition period from ____________ to ______________

 

Commission File Number: 000-20333

 

NOCOPI TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

 

Maryland	87-0406496
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

 

480 Shoemaker Road, Suite 104, King of Prussia, PA 19406

(Address of principal executive offices) (Zip Code)

 

(610) 834-9600

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act: None.

 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒  No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   ☐	Accelerated filer   ☐
Non-accelerated Filer     ☒	Smaller reporting company  ☒
	Emerging growth company  ☐

 

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 10,501,178 shares of common stock, par value $0.01, as of August 9, 2024.

 

 

 

NOCOPI TECHNOLOGIES, INC.

 

INDEX

 

	PAGE
Part I. FINANCIAL INFORMATION
Item 1.      Financial Statements	1
Statements of Comprehensive Income (Loss) for Three Months and Six Months Ended June 30, 2024 and June 30, 2023	1
Balance Sheets at June 30, 2024 and December 31, 2023	2
Statements of Cash Flows for Six Months Ended June 30, 2024 and June 30, 2023	3
Statements of Stockholders’ Equity for Three Months and Six Months Ended June 30, 2024 and June 30, 2023	4
Notes to Financial Statements	5
Item 2.      Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.      Quantitative and Qualitative Disclosures About Market Risk	15
Item 4.      Controls and Procedures	15
Part II. OTHER INFORMATION
Item 1.       Legal Proceedings	16
Item 1A.   Risk Factors	16
Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds.	16
Item 3.      Defaults Upon Senior Securities	16
Item 4.      Mine Safety Disclosures	16
Item 5.      Other Information	16
Item 6.       Exhibits	16
SIGNATURES	17

 

 i

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Nocopi Technologies, Inc.

Statements of Comprehensive Income (Loss)*

(unaudited)

		Three Months ended June 30								Six Months ended June 30
		2024				2023				2024				2023
Revenues
Licenses, royalties and fees		$	89,000			$	150,200			$	175,500			$	273,200
Product and other sales			370,000				449,000				681,800				918,100
Total revenues			459,000				599,200				857,300				1,191,300
Cost of revenues
Licenses, royalties and fees			51,000				49,800				102,700				108,500
Product and other sales			177,700				179,200				358,700				401,000
Total cost of revenues			228,700				229,000				461,400				509,500
Gross profit			230,300				370,200				395,900				681,800
Operating expenses
Research and development			42,100				35,300				83,500				80,100
Sales and marketing			75,900				61,100				144,900				147,400
General and administrative			1,254,700				223,300				2,469,500				424,500
Total operating expenses			1,372,700				319,700				2,697,900				652,000
Net income (loss) from operations			(1,142,400	)			50,500				(2,302,000	)			29,800
Other income (expenses)
Interest income			142,800				60,400				279,900				122,500
Interest expense and bank charges			(5,800	)			(4,400	)			(11,500	)			(5,000	)
Total other income (expenses)			137,000				56,000				268,400				117,500
Net income (loss) before income taxes			(1,005,400	)			106,500				(2,033,600	)			147,300
Income taxes			—				27,400				—				37,900
Net income (loss)		$	(1,005,400	)		$	79,100			$	(2,033,600	)		$	109,400
Net income (loss) per common share
Basic		$	(.10	)		$	.01			$	(.19	)		$	.01
Diluted		$	(.10	)		$	.01			$	(.19	)		$	.01
Weighted average common shares outstanding
Basic			10,501,178				9,251,178				10,501,178				9,251,178
Diluted			10,501,178				9,251,178				10,501,178				9,251,178

 

*See accompanying notes to these financial statements.

 

 

 

Nocopi Technologies, Inc.

Balance Sheets*

 (unaudited)

		June 30				December 31
		2024				2023
Assets
Current assets
Cash		$	4,677,800			$	2,269,200
Accounts receivable less $12,000 allowance for credit losses			1,098,400				1,120,700
Inventory			319,300				448,000
Interest receivable			252,300				160,000
Short-term investments			5,823,000				7,985,600
Prepaid and other			104,800				121,800
Total current assets			12,275,600				12,105,300
Fixed assets
Leasehold improvements			81,500				81,500
Furniture, fixtures and equipment			178,500				169,800
Fixed assets, gross			260,000				251,300
Less: accumulated depreciation and amortization			236,500				214,800
Total fixed assets			23,500				36,500
Other assets
Long-term receivable			1,564,600				1,838,500
Operating lease right of use – building			70,600				17,600
Other assets			1,635,200				1,856,100
Total assets		$	13,934,300			$	13,997,900
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable		$	100,200			$	27,500
Accrued expenses			134,200				94,600
Stock compensation payable			3,171,000				1,347,100
Operating lease liability – current			70,600				17,600
Total current liabilities			3,476,000				1,486,800
Other liabilities
Accrued expenses – non-current			109,400				128,600
Total other liabilities			109,400				128,600
Stockholders' equity
Common stock, $0.01 par value Authorized – 75,000,000 shares Issued and outstanding – 10,501,178 shares			105,000				105,000
Paid-in capital			21,647,100				21,647,100
Accumulated deficit			(11,403,200	)			(9,369,600	)
Total stockholders' equity			10,348,900				12,382,500
Total liabilities and stockholders' equity		$	13,934,300			$	13,997,900

 

 

*See accompanying notes to these financial statements.

 

 

  

Nocopi Technologies, Inc.

Statements of Cash Flows*

(unaudited)

 

		Six Months ended June 30
		2024				2023
Operating Activities
Net income (loss)		$	(2,033,600	)		$	109,400
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization			21,700				18,200
Stock-based compensation			1,823,900				—
Interest income accrued			(92,300	)			—
(Increase) decrease in assets
Accounts receivable			22,300				(242,100	)
Inventory			128,700				118,300
Prepaid and other			17,000				(4,600	)
Long-term receivables			220,900				338,500
Increase (decrease) in liabilities
Accounts payable and accrued expenses			146,100				(61,600	)
Taxes on income			—				(138,800	)
Net cash provided by operating activities			254,700				137,300
Investing Activities
Additions to fixed assets			(8,700	)			(11,900	)
Sale of short-term investment			2,162,600				—
Net cash provided by (used in) investing activities			2,153,900				(11,900	)
Increase in cash and cash equivalents			2,408,600				125,400
Cash and Cash Equivalents
Beginning of year			2,269,200				5,337,800
End of period		$	4,677,800			$	5,463,200

 

 

*See accompanying notes to these financial statements.

  

 

 

Nocopi Technologies, Inc.

Statements of Stockholders’ Equity*

For Three Months and Six Months ended June 30, 2024 and June 30, 2023

(unaudited)

 

		Common stock								Paid-in				Accumulated
		Shares				Amount				Capital				Deficit				Total
Balance at December 31, 2023			10,501,178			$	105,000			$	21,647,100			$	(9,369,600	)		$	12,382,500
Net loss							—				—				(1,028,200	)			(1,028,200	)
Balance at March 31, 2024			10,501,178				105,000				21,647,100				(10,397,800	)			11,354,300
Net loss			—				—				—				(1,005,400	)			(1,005,400	)
Balance – June 30, 2024			10,501,178			$	105,000			$	21,647,100			$	(11,403,200	)		$	10,348,900

 

		Common stock								Paid-in				Accumulated
		Shares				Amount				Capital				Deficit				Total
Balance – December 31, 2022			9,251,178			$	92,500			$	16,659,600			$	(7,933,700	)		$	8,818,400
Net income			—				—				—				30,300				30,300
Balance – March 31, 2023			9,251,178				92,500				16,659,600				(7,903,400	)			8,848,700
Net income			—				—				—				79,100				79,100
Balance June 30, 2023			9,251,178			$	92,500			$	16,659,600			$	(7,824,300	)		$	8,927,800

 

 

* See accompanying notes to these financial statements.

 

 

  

NOCOPI TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)       

 

Note 1. Financial Statements

 

The accompanying unaudited condensed financial statements have been prepared by Nocopi Technologies, Inc. (the “Company”). These statements include all adjustments (consisting only of normal recurring adjustments) which management believes necessary for a fair presentation of the statements and have been prepared on a consistent basis using the accounting policies described in Note 2 Significant Accounting Policies included in the Notes to Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission on March 25, 2024 (the “2023 Annual Report”). Certain financial information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the accompanying disclosures are adequate to make the information presented not misleading. The Notes to Financial Statements included in the 2023 Annual Report should be read in conjunction with the accompanying interim financial statements. The interim operating results for the three months and six months ended June 30, 2024 may not be necessarily indicative of the operating results expected for the full year.

 

The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 220 in reporting comprehensive income (loss).  Comprehensive income (loss) is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income (loss).  Since the Company has no items of other comprehensive income (loss), comprehensive income (loss) is equal to net income (loss).

 

Recently Issued Accounting Pronouncements Not Yet Adopted

As of June 30, 2024, there are no recently issued accounting standards not yet adopted which would have a material effect on the Company's financial statements.

Recently Adopted Accounting Pronouncements

As of June 30, 2024 and for the period then ended, there are no recently adopted accounting standards that have a material effect on the Company's financial statements.

Note 2. Stock Based Compensation

 

The Company follows FASB ASC 718, Compensation – Stock Compensation, and uses the Black-Scholes option pricing model to calculate the grant-date fair value of an award. On June 17, 2024, the Company’s shareholders approved the Nocopi Technologies, Inc. 2024 Incentive Compensation Plan (the “2024 Plan”), which allows the Company to issue equity awards to directors, officers, other employees and consultants of the Company. However, as of June 30, 2024, no equity awards had been granted under the 2024 Plan, and as a result, there was no unrecognized portion of expense related to stock option grants under the 2024 Plan at June 30, 2024.

 

As part of an employment agreement, the Company granted an executive a one-time equity award of 1,000,000 restricted shares of the Company’s common stock valued at $3,580,000, fair value, which award shall vest in its entirety on August 18, 2024. The fair market value of the restricted stock award was determined based on the closing price of the Company’s common stock on the grant date and is being amortized on a straight-line basis to general and administrative expense as stock-based compensation over the one-year vesting term. The Company recorded stock-based compensation expense of $890,100 and $1,780,200 for the three and six months ended June 30, 2024, respectively. To the extent the Company has not established an employee equity compensation plan on or prior to August 18, 2024, the restricted shares may be converted, at the election of the executive, in full or in part, into cash compensation, at a rate of $3.58 per share of common stock, which was the fair market value of the common stock on October 10, 2023, which was the date the Board of Directors approved the grant. Since the issuance of the restricted stock can be settled in cash, the monthly amortization of the $3,580,000 fair value of the restricted stock grant is recorded as stock compensation payable. If the restricted stock grant is settled in shares of the Company’s common stock, then the stock compensation payable will be reclassified to additional paid in capital.

 

5

NOCOPI TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

 

 

 

Note 3. Cash and Cash Equivalents

Cash and cash equivalents
		June 30 2024				December 31 2023
Cash and cash equivalents
Cash and money market funds		$	4,677,800			$	2,269,200
Cash and cash equivalents		$	4,677,800			$	2,269,200

 

Note 4. Short-term Investments 

Schedule of short term investments
		June 30				December 31
		2024				2023
Short-term investments
U.S. Treasury Bills		$	5,823,000			$	7,985,600
Short-term investments		$	5,823,000			$	7,985,600

 

 Debt securities classified as held-to-maturity are reported at amortized cost.

Schedule of amortized cost and fair value of securities held to maturity
		Amortized Cost				Fair Value
U.S. Treasury Bills
Due July 11, 2024			1,074,800				1,123,700
Due September 5, 2024			4,748,200				4,952,100
Total		$	5,823,000			$	6,075,800

 

Total interest income recognized for U.S. Treasury Bills was $182,800 and $239,600 for the six months ended June 30, 2024 and year ended December 31, 2023, respectively. Interest receivable was $252,300 and $160,000 for the six months ended June 30, 2024 and for the year ended December 31, 2023, respectively. 

 

Note 5. Long-term Receivables

 

As of June 30, 2024, the Company had long-term receivables of $1,564,600 from two of the three licensees representing the present value of fixed guaranteed royalty payments that will be payable over varying periods of two through five years that commenced in the second half of 2022 and terminate in the second quarter of 2028. The fixed guaranteed royalty payments result from amendments to license agreements with two existing licensees and a license agreement with a new licensee. The receivable represents the present value of the fixed minimum annual payments due under the license agreements, discounted at the Company's incremental borrowing rate of 4%. 

 

The three agreements grant licenses for the use of certain patented ink technology as it exists at the time that it is granted which is considered functional intellectual property. Under Topic 606, a performance obligation to transfer a license for functional intellectual property is satisfied at a point in time and the fixed consideration could be recognized upfront when the Company transfers control of the licensee if certain criteria are met. Specifically, the minimum royalty guarantee could be recognized upfront if the following conditions are met:

 

·

The royalty payment is fixed or determinable

 

·

Collection of the royalty payment is considered probable

 

·

The licensee has the ability to benefit from the licensed technology

 

The Company determined that the above conditions were met upon execution of the new 2022 license agreements and recognized $2,810,600 of royalty revenue net of imputed interest of $131,300 for the year ended December 31, 2022. The commissions are payable over the term of the license agreements and are due when payments are received by the Company. As of June 30, 2024, the accrued commission payable balance was approximately $150,300.

 

The current portion of the three license agreements in the amount of $585,000 and $624,600, is included in accounts receivable on the balance sheets as of June 30, 2024 and December 31, 2023, respectively.

 

 

6

NOCOPI TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

 

 

 

The following table summarizes the future minimum payments due under the three license agreements as of June 30, 2024:

Schedule of future minimum payments
Year Ending December 31:
	2024			$	321,000
	2025				570,000
	2026				570,000
	2027				557,500
	2028				260,000
	Total			$	2,278,500

 

The Company has evaluated the collectability of the long-term receivables and believes them to be fully collectible as of June 30, 2024. However, there can be no assurance that the receivables will not be impaired in the future due to changes in the licensees’ financial condition or other factors. 

 

The long-term receivables are recorded at its present value as of June 30, 2024, and will be amortized over the term of the license agreements using the effective interest method. The unamortized balance of the long-term receivables as of June 30, 2024 is $1,564,600.

 

Note 6. Line of Credit

 

In November 2018, the Company negotiated a $150,000 revolving line of credit with a bank to provide a source of working capital, if required. The line of credit is secured by all the assets of the Company and bears interest at the bank’s prime rate for a period of one year and its prime rate plus 1.5% thereafter. The line of credit is subject to an annual review and quiet period. There were no borrowings under the line of credit since its inception and the line of credit was terminated on July 13, 2023.

 

Note 7. Stockholders’ Equity

On September 11, 2023 the Company entered into a stock purchase agreement in connection with a private placement for total gross proceeds of $5.0 million. The stock purchase agreement provided for the issuance of an aggregate of 1,250,000 shares of the Company’s common stock to an investor at a purchase price of $4.00 per share. In addition, as consideration for general advisory services until the third anniversary, the Company agreed to issue an aggregate total of 65,790 shares of common stock with a total fair market value on the date of grant of $263,160, which shares shall be issued as follows: one-third (21,930 shares) on September 11, 2024, one-third (21,930 shares) on September 11, 2025 and one-third (21,930 shares) on September 11, 2026. The Company expenses the value of the stock grant, which is determined to be the fair market value of the shares at the date of grant, straight-line over the term of the advisory agreement. For the three and six months ended June 30, 2024, the Company recognized $36,800 and $73,700, respectively of consulting expense associated with this issuance. On September 11, 2023, the sale pursuant to the Purchase Agreement closed. No placement fees or commissions were paid in connection with this transaction.

At June 30, 2024, the Company had no warrants outstanding.

Note 8. Income Taxes

 

At June 30, 2024, there was no income tax benefit for the net losses for the six months ended June 30, 2024 due to the recording of a full valuation allowance since it is more likely than not that that the realization of the net deferred tax assets would not be realized. At June 30, 2023 the Company had federal and state taxable income of approximately $138,400 and $88,400, respectively. State income taxes in the six months ended June 30, 2023 resulted from limitations placed on income tax net operating loss deductions by the Commonwealth of Pennsylvania.

 

The components for federal and state income tax expense are:

Schedule of federal and state income tax expense
		Six Months ended June 30
		2024				2022
Current federal taxes		$	—			$	29,100
Current state taxes			—				8,800
Income tax expense (benefit)		$	—			$	37,900

 

There was no change in unrecognized tax benefits during the period ended June 30, 2024 and there was no accrual for uncertain tax positions as of June 30, 2024. Tax years from 2021 through 2023 remain subject to examination by U.S. federal and state jurisdictions. The Federal net operating loss carryforward is $438,891 and the Pennsylvania State net operating loss carryforward is currently $2,023,257 as of June 30, 2024.

 

 

7

NOCOPI TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

 

 

 

Note 9. Earnings (Loss) per Share

 

In accordance with FASB ASC 260, Earnings per Share, basic earnings (loss) per common share is computed using net earnings (loss) divided by the weighted average number of common shares outstanding for the periods presented. Diluted earnings (loss) per share are computed using weighted average number of common shares plus dilutive common share equivalents outstanding during the period. Since the Company did not have any common stock equivalents outstanding as of June 30, 2024 and June 30, 2023, basic and diluted earnings (loss) per share were the same. 

 

Note 10. Major Customer and Geographic Information

 

The Company’s revenues, expressed as a percentage of total revenues, from non-affiliated customers that equaled 10% or more of the Company’s total revenues were:

Schedule of revenues as percentage of revenue
		Three Months ended June 30								Six Months ended June 30
		2024				2023				2024				2023
Customer A			69	%			67	%			69	%			69	%
Customer B			14	%			20	%			15	%			16	%

 

The Company’s non-affiliate customers whose individual balances amounted to more than 10% of the Company’s net accounts receivable, expressed as a percentage of net accounts receivable, were:

Schedule of non-affiliated customers with accounts receivable
		June 30				December 31
		2024				2023
Customer A			—				—
Customer B			81	%			82	%

 

The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company also maintains allowances for potential credit losses. The loss of a major customer could have a material adverse effect on the Company’s business operations and financial condition.

 

The Company’s revenues by geographic region are as follows:

Schedule of revenue by geographic region
		Three Months ended June 30								Six Months ended June 30
		2024				2023				2024				2023
North America		$	87,300			$	145,800			$	165,000			$	273,600
South America			600				—				600				—
Asia			357,300				435,200				659,300				876,700
Australia			13,800				18,200				32,400				41,000
		$	459,000			$	599,200			$	857,300			$	1,191,300

 

 

 

8

NOCOPI TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

 

 

 

Note 11. Leases

 

The Company conducts its operations in leased facilities under a non-cancelable operating lease, which was originally set to expire in April 2024. The lease has been extended for 13 months for a new term that began on May 1, 2024 and will expire on May 31, 2025.

 

Due to the adoption of the new lease standard under the optional transition method which allows the entity to apply the new lease standard at the adoption date, the Company has capitalized the present value of the minimum lease payments commencing May 1, 2024, using an estimated incremental borrowing rate of 6.5%. The minimum lease payments do not include common area annual expenses which are considered to be non-lease components.

 

As of May 1, 2024 the operating lease right-of-use asset and operating lease liability amounted to $83,046 with no cumulative-effect adjustment to the opening balance of accumulated deficit.

 

There are no other material operating leases. The Company has elected not to recognize right-of-use assets and lease liabilities arising from short-term leases.

 

Total lease expense under operating leases for the three and six months ended June 30, 2024 was $17,600 and $31,000, respectively. Total lease expense under operating leases for the three and six months ended June 30, 2023 was $13,300 and $26,700, respectively.

 

Maturities of current lease liabilities as of June 30, 2024 are as follows:

Schedule of maturities of lease liabilities
				Operating Leases
	Period ending December 31
	2024				39,600
	2025				33,000
	Total lease payments				72,600
	Less imputed interest				(2,000	)
	Total			$	70,600

 

 

 

 

  

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-Looking Information

 

This Report on Form 10-Q contains, and our officers and representatives may from time to time make, “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding:

 

	·	Expected operating results, such as revenue, expenses and capital expenditures
	·	Current or future volatility in market conditions
	·	Our belief that we have sufficient liquidity to fund our business operations during the next twelve months
	·	Strategy for customer retention, growth, product development, market position, and risk management

 

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:

 

	·	The extent to which we are successful in gaining new long-term relationships with customers or retaining significant existing customers and the level of service failures that could lead customers to use competitors' services.
	·	Strategic actions, including business acquisitions and our success in integrating acquired businesses.
	·	Our ability to improve our current credit rating with our vendors and the impact on our raw materials and other costs and competitive position of doing so.
	·	The impact of losing our intellectual property protections or the loss in value of our intellectual property.
	·	Changes in customer demand.
	·	The occurrence of hostilities, political instability or catastrophic events.
	·	Developments and changes in laws and regulations, including increased regulation of our industry through legislative action and revised rules and standards.
	·	Security breaches, cybersecurity attacks and other significant disruptions in our information technology systems.
	·	Such other factors as discussed throughout Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations in this Quarterly Report on Form 10-Q, and throughout Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2023.

 

 

 

Any forward-looking statement made by us in this Report on Form 10-Q is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

 

The following discussion and analysis should be read in conjunction with our condensed financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management. This information should also be read in conjunction with our audited historical financial statements which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission on March 25, 2024.

 

Background Overview

 

Nocopi Technologies, Inc. develops and markets specialty reactive inks for applications in the large educational and toy products market. We also develop and market technologies for document and product authentication, which we believe can reduce losses caused by fraudulent document reproduction or by product counterfeiting and/or diversion. We derive our revenues primarily from licensing our technologies on an exclusive or non-exclusive basis to licensees who incorporate our technologies into their product offering and from selling products incorporating our technologies to the licensees or to their licensed printers.

 

Unless the context otherwise requires, all references to the “Company,” “we,” “our” or “us” and other similar terms means Nocopi Technologies, Inc., a Maryland corporation.

 

 Results of Operations

 

The Company’s revenues are derived from (a) royalties paid by licensees of our technologies, (b) fees for the provision of technical services to licensees and (c) from the direct sale of (i) products incorporating our technologies, such as inks, security paper and pressure sensitive labels, and (ii) equipment used to support the application of our technologies, such as ink-jet printing systems. Royalties consist of guaranteed minimum royalties payable by our licensees in certain cases and additional royalties which typically vary with the licensee’s sales or production of products incorporating the licensed technology. Service fees and sales revenues vary directly with the number of units of service or product provided.

 

The Company recognizes revenue on its lines of business as follows:

 

	a.	License fees for the use of our technology and royalties with guaranteed minimum amounts are recognized at a point in time when the term begins;
	b.	Product sales are recognized at the time of the transfer of goods to customers at an amount that the Company expects to be entitled to in exchange for these goods, which is at the time of shipment; and
	c.	Fees for technical services are recognized at the time of the transfer of services to customers at an amount that the Company expects to be entitled to in exchange for the services, which is when the service has been rendered.

 

We believe that, as fixed cost reductions beyond those we have achieved in recent years may not be achievable, our operating results are substantially dependent on revenue levels. Because revenues derived from licenses and royalties carry a much higher gross profit margin than other revenues, operating results are also substantially affected by changes in revenue mix.

 

Both the absolute amount of the Company’s revenues and the mix among the various sources of revenue are subject to substantial fluctuation. We have a relatively small number of substantial customers rather than a large number of small customers. Accordingly, changes in the revenue received from a significant customer can have a substantial effect on the Company’s total revenue, revenue mix and overall financial performance. Such changes may result from a substantial customer’s product development delays, engineering changes, changes in product marketing strategies, production requirements and the like. In addition, certain customers have, from time to time, sought to renegotiate certain provisions of their license agreements and, when the Company agrees to revise such terms, revenues from the customer may be adversely affected.

 

 

Revenues for the second quarter of 2024 were $459,000 compared to $599,200 in the second quarter of 2023, a decrease of $140,200, or approximately 23%. Licenses, royalties and fees decreased by $61,200, or approximately 41%, to $89,000 in the second quarter of 2024 from $150,200 in the second quarter of 2023. The decrease in licenses, royalties and fees in the second quarter of 2024 compared to the second quarter of 2023 is due primarily to lower royalties from the Company’s licensees in entertainment and toy products markets. We cannot assure you that the marketing and product development activities of the Company’s licensees or other businesses in the entertainment and toy products market will produce a significant increase in revenues for the Company, nor can the timing of any potential revenue increases be predicted, particularly given the uncertain economic conditions presently being experienced.

 

Product and other sales decreased by $79,000, or approximately 17%, to $370,000 in the second quarter of 2024 from $449,000 in the second quarter of 2023. Sales of ink decreased in the second quarter of 2024 compared to the second quarter of 2023 due primarily to lower ink shipments to the third party authorized printer used by two of the Company’s major licensees in the entertainment and toy products market. In the second quarter of 2024, the Company derived revenues of approximately $424,800 from our licensees and their authorized printers in the entertainment and toy products market compared to revenues of approximately $578,800 in the second quarter of 2023.

 

 For the first six months of 2024, revenues were $857,300, representing a decrease of $334,000, or approximately 28%, from revenues of $1,191,300 in the first six months of 2023. Licenses, royalties and fees decreased by $97,700, or approximately 36%, to $175,500 in the first six months of 2024 from $273,200 in the first six months of 2023. The decrease in licenses, royalties and fees is due primarily to lower royalties from the Company’s licensees in the entertainment and toy products market. We cannot assure you that the marketing and product development activities of the Company’s licensees or other businesses in the entertainment and toy products market will produce a significant increase in revenues for the Company, nor can the timing of any potential revenue increases be predicted, particularly given the uncertain economic conditions presently being experienced.

 

Product and other sales decreased by $236,300, or approximately 26%, to $681,800 in the first six months of 2024 from $918,100 in the first six months of 2023. Sales of ink decreased in the first six months of 2024 compared to the first six of 2023 due primarily to lower ink shipments to the third party authorized printer used by two of the Company’s major licensees in the entertainment and toy products market. The Company derived revenues of approximately $806,800 from licensees and their authorized printers in the entertainment and toy products market in the first six months of 2024 compared to revenues of approximately $1,120,300 in the first six months of 2023.

 

The Company’s gross profit decreased to $230,300 in the second quarter of 2024, or approximately 50% of revenues, from $370,200 in the second quarter of 2023, or approximately 62% of revenues. Licenses, royalties and fees have historically carried a higher gross profit than product and other sales, which generally consist of supplies or other manufactured products which incorporate the Company’s technologies or equipment used to support the application of its technologies. These items (except for inks which are manufactured by the Company) are generally purchased from third-party vendors and resold to the end-user or licensee and carry a lower gross profit than licenses, royalties and fees.

 

For the first six months of 2024, gross profit was $395,900, or approximately 46% of revenues, compared to $681,800, or approximately 57% of revenues, in the first six months of 2023. The lower gross profit in the first six months of 2024 compared to the first six months of 2023 was primarily due to a decrease in gross profit from both licenses, royalties and fees and product and other sales.

 

As the variable component of cost of revenues related to licenses, royalties and fees is a low percentage of these revenues and the fixed component is not substantial, period to period changes in revenues from licenses, royalties and fees can significantly affect both the gross profit from licenses, royalties and fees as well as overall gross profit. The gross profit from licenses, royalties and fees decreased to approximately 43% in the second quarter of 2024 compared to approximately 67% in the second quarter of 2023 and to approximately 41% of revenues from licenses, royalties and fees in the first six months of 2024 from approximately 60% in the first six months of 2023.

 

 

 

The gross profit, expressed as a percentage of revenues, of product and other sales is dependent on both the overall sales volumes of product and other sales and on the mix of the specific goods produced and/or sold. The gross profit from product and other sales decreased to approximately 52% of revenues in the second quarter of 2024 compared to approximately 60% of revenues in the second quarter of 2023. For the first six months of 2024, the gross profit, expressed as a percentage of revenues, decreased to approximately 47% of revenues from product and other sales compared to approximately 56% of revenues from product and other sales in the first six months of 2023

 

Research and development expenses increased in the second quarter of 2024 to $42,100 from $35,300 in the second quarter of 2023 and to $83,500 in the first six months of 2024 from $80,100 in the first six months of 2023 due primarily to higher lab expenses in the second quarter and first six months of 2024 compared to the second quarter and first six months of 2023.

 

Sales and marketing expenses increased to $75,900 in the second quarter of 2024 from $61,100 in the second quarter of 2023 and decreased to $144,900 in the first six months of 2024 from $147,000 in the first six months of 2023. The increase in the second quarter of 2024 compared to the second quarter of 2023 is due primarily to higher commission and employee related expenses in the second quarter of 2024 compared to the second quarter of 2023. The decrease in the first six months of 2024 compared to the first six months of 2023 is due primarily to lower commission expense on the lower level of revenues in the first six months of 2024 compared to the first six months of 2023. 

 

General and administrative expenses increased in the second quarter and first six months of 2024 to $1,254,700 and $2,469,500, respectively, from $223,300 and $424,500, respectively, in the second quarter and first six months of 2023 due primarily to higher stock-based compensation, higher professional fees, and higher employee related expenses in the second quarter and first six months of 2024 compared to the second quarter and first six months of 2023.

 

For the second quarter of 2024, there was no income tax benefit for the net losses for the second quarter of 2024 due to the recording of a full valuation allowance since it is more likely than not that that the realization of the net deferred tax assets would not be realized. Income taxes in the second quarter of 2024 include federal and state income taxes. The state income taxes result from limitations placed on income tax net operating loss deductions by the Commonwealth of Pennsylvania.

 

The net loss of $1,005,400 in the second quarter of 2024 compared to net income $79,100 in the second quarter of 2023 resulted primarily from a lower gross profit on a lower level of licenses, royalties and fees and product sales, higher operating expenses and interest income in the second quarter of 2024 compared to the second quarter of 2023. The net loss of $2,033,600 in the first six months of 2024 compared to net income of $109,400 in the first six months of 2023 resulted primarily from a lower gross profit on a lower level of license, royalties, and fees and product sales in the first six months of 2024 compared to the first six months of 2023, higher operating expenses and interest income in the first six months of 2024 compared to the first six months of 2023.

 

Plan of Operation, Liquidity and Capital Resources

 

During the first six months of 2024, the Company’s cash increased to $4,677,800 at June 30, 2024 from $2,269,200 at December 31, 2023. During the first six months of 2024, the Company generated $254,700 from its operating activities and provided $2,153,900 from investing activities.

 

During the first six months of 2024, the Company’s revenues decreased approximately 28% primarily as a result of lower sales of ink to an authorized printer of the Company’s licensees in the entertainment and toy products market and lower royalty revenues from the Company’s licensees in the entertainment and toy products market. Our total overhead expenses increased in the first six months of 2024 to $2,697,900 compared to $652,000 in the first six months of 2023, the Company’s interest income increased and the Company’s income tax expense decreased in the first six months of 2024 compared to the first six months of 2023. As a result of these factors, the Company generated a net loss of $2,033,600 in the first six months of 2024 compared to a net income of $109,400 in the first six months of 2023. The Company had positive operating cash flow of $254,700 during the first six months of 2024. At June 30, 2024, the Company had positive working capital of $8,799,600 and stockholders’ equity of $10,348,900. For the full year of 2023, the Company had a net loss of $1,435,900 and had negative operating cash flow of $19,300. At December 31, 2023, the Company had working capital of $10,618,500 and stockholders’ equity of $12,382,500.

 

 

 

Our plan of operation for the twelve months beginning with the date of this Quarterly Report on Form 10-Q consists of concentrating available human and financial resources to continue to capitalize on the specific business relationships the Company has developed in the entertainment and toy products market. This includes two licensees that have been marketing products incorporating the Company’s technologies since 2012. These two licensees maintain a significant presence in the entertainment and toy products market and are well known and highly regarded participants in this market. We anticipate that these two licensees will expand their current offerings that incorporate our technologies and will introduce and market new products that will incorporate our technologies available to them under their license agreements with the Company. We will continue to develop various applications for these licensees. We also plan to expand our licensee base in the entertainment and toy market. We currently have additional licensees marketing or developing products incorporating our technologies in certain geographic and niche markets of the overall entertainment and toy products market.

 

The Company maintains its presence in the retail loss prevention market and believes that revenue growth in this market can be achieved through increased security ink sales to its licensees in this market. We will continue to adjust our production and technical staff as necessary and, subject to available financial resources, invest in capital equipment needed to support potential growth in ink production requirements beyond our current capacity. Additionally, we will pursue opportunities to market our current technologies in specific security and non-security markets. There can be no assurances that these efforts will enable the Company to generate additional revenues and positive cash flow.

 

Our future growth strategy includes expanding our business through acquisitions of other companies with competing or complementary services, technologies or businesses in order to expand our product and service offerings to grow our free cash flow. We are currently actively engaged in the process to identify acquisition candidates and negotiate transactions. As of the date of this Quarterly Report on Form 10-Q, we have no agreements to make any acquisition. We expect to fund our business expansion through the issuance of debt or equity securities, the payment of cash, the exchange of services, or any combination thereof.

The Company has received, and may in the future seek, additional capital in the form of debt, equity or both, to support our working capital requirements and to provide funding for other business opportunities. We cannot assure you that if we require additional capital, that we will be successful in obtaining such additional capital, or that such additional capital, if obtained, will enable the Company to generate additional revenues and positive cash flow.

 

As previously stated, we generate a significant portion of our total revenues from licensees in the entertainment and toy products market. These licensees generally sell their products through retail outlets. In the future, such sales may be adversely affected by changes in consumer spending that may occur as a result of an uncertain economic environment in 2024 and beyond and its effect on the global economy, geopolitical instability including the Russia-Ukraine war and the supply chain disruptions related to both as well as the record inflation and significantly higher interest rates currently being experienced in the United States along with the probability of an economic recession both in the United States and globally. As a result, our revenues, results of operations and liquidity may be further negatively impacted in future periods.

 

Contractual Obligations

 

As of June 30, 2024, there were no material changes in our contractual obligations from those disclosed in our Annual Report on Form 10-K filed with the SEC on March 25, 2024, other than those appearing elsewhere in this Quarterly Report on Form 10-Q.

 

Recently Adopted Accounting Pronouncements

 

As of June 30, 2024 and for the period then ended, there are no recently adopted accounting standards that have a material effect on the Company’s financial statements.

 

 

 

Recently Issued Accounting Pronouncements Not Yet Adopted

        As of June 30, 2024, there were no recently issued accounting standards not yet adopted that would have a material effect on the Company’s financial statements

 

Off-Balance Sheet Arrangements

 

The Company does not have any off-balance sheet arrangements.

  

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not Applicable

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures. The Company’s management, with the participation of the Company’s Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of June 30, 2024. Based on this evaluation, the Company’s Principal Executive Officer and Principal Financial Officer concluded that, as of June 30, 2024, the Company’s disclosure controls and procedures were effective, in that they provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to the Company’s management, including the Company’s Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 

 

 

  

PART II - OTHER INFORMATION

  

Item 1. Legal Proceedings.

 

None

 

Item 1A. Risk Factors.

 

Information about risk factors for the quarter ended June 30, 2024 does not differ materially from that set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None

 

Item 4. Mine Safety Disclosures.

 

Not applicable

 

Item 5.  Other Information

 

 

Item 6.  Exhibits

 

(a) Exhibits

  

Exhibit Number		Description		Location
31.1		Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.		Filed herewith
31.2		Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.		Filed herewith
32.1		Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.		Furnished herewith
101.INS		Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document
101.SCH		Inline XBRL Taxonomy Extension Schema
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase
104		Cover page formatted as Inline XBRL and contained in Exhibit 101

 

 

 

 

SIGNATURES

 

Pursuant to the requirement of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

		NOCOPI TECHNOLOGIES, INC.
DATE: August 14, 2024		/s/ Michael S. Liebowitz
		Michael S. Liebowitz
		Chairman of the Board, President & Chief Executive Officer (Principal Executive Officer)
DATE: August 14, 2024		/s/ Debra E. Glickman
		Debra E. Glickman
		Chief Financial Officer (Principal Financial and Accounting Officer)

 

 

 

 

 

EXHIBIT 31.1 

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

 

I, Michael S. Liebowitz, Chief Executive Officer of Nocopi Technologies, Inc., certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of Nocopi Technologies, Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 14, 2024

 

/s/ Michael S. Liebowitz

Michael S. Liebowitz

Chief Executive Officer

 

 

 

EXHIBIT 31.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER

 

I, Debra  E. Glickman, Chief Financial Officer of Nocopi Technologies, Inc., certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of Nocopi Technologies, Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (registrant’s fourth fiscal quarter in the case of annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 14, 2024

 

/s/ Debra  E. Glickman

Debra  E. Glickman

Chief Financial Officer

 

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Nocopi Technologies, Inc. (the "Company") on Form 10-Q for the Quarter ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Michael S. Liebowitz., Chief Executive Officer, and Debra  E. Glickman, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that;

 

(1) The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

August 14, 2024

 

/s/ Michael S. Liebowitz

Michael S. Liebowitz

Chief Executive Officer (Principal Executive Officer)

 

/s/ Debra  E. Glickman

Debra  E. Glickman

Chief Financial Officer (Principal Financial Officer)

 

v3.24.2.u1

Cover - shares	6 Months Ended
	Jun. 30, 2024	Aug. 09, 2024
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Document Period End Date	Jun. 30, 2024
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Entity File Number	000-20333
Entity Registrant Name	NOCOPI TECHNOLOGIES, INC.
Entity Central Index Key	0000888981
Entity Tax Identification Number	87-0406496
Entity Incorporation, State or Country Code	MD
Entity Address, Address Line One	480 Shoemaker Road
Entity Address, Address Line Two	Suite 104
Entity Address, City or Town	King of Prussia
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	19406
City Area Code	(610)
Local Phone Number	834-9600
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v3.24.2.u1

Statements of Comprehensive Income (Loss) (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenues
Licenses, royalties and fees	$ 89,000	$ 150,200	$ 175,500	$ 273,200
Product and other sales	370,000	449,000	681,800	918,100
Total revenues	459,000	599,200	857,300	1,191,300
Cost of revenues
Licenses, royalties and fees	51,000	49,800	102,700	108,500
Product and other sales	177,700	179,200	358,700	401,000
Total cost of revenues	228,700	229,000	461,400	509,500
Gross profit	230,300	370,200	395,900	681,800
Operating expenses
Research and development	42,100	35,300	83,500	80,100
Sales and marketing	75,900	61,100	144,900	147,400
General and administrative	1,254,700	223,300	2,469,500	424,500
Total operating expenses	1,372,700	319,700	2,697,900	652,000
Net income (loss) from operations	(1,142,400)	50,500	(2,302,000)	29,800
Other income (expenses)
Interest income	142,800	60,400	279,900	122,500
Interest expense and bank charges	(5,800)	(4,400)	(11,500)	(5,000)
Total other income (expenses)	137,000	56,000	268,400	117,500
Net income (loss) before income taxes	(1,005,400)	106,500	(2,033,600)	147,300
Income taxes		27,400		37,900
Net income (loss)	$ (1,005,400)	$ 79,100	$ (2,033,600)	$ 109,400
Net income (loss) per common share
Basic	$ (0.10)	$ 0.01	$ (0.19)	$ 0.01
Diluted	$ (0.10)	$ 0.01	$ (0.19)	$ 0.01
Weighted average common shares outstanding
Basic	10,501,178	9,251,178	10,501,178	9,251,178
Diluted	10,501,178	9,251,178	10,501,178	9,251,178

v3.24.2.u1

Balance Sheets (Unaudited) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Current assets
Cash	$ 4,677,800	$ 2,269,200
Accounts receivable less $12,000 allowance for credit losses	1,098,400	1,120,700
Inventory	319,300	448,000
Interest receivable	252,300	160,000
Short-term investments	5,823,000	7,985,600
Prepaid and other	104,800	121,800
Total current assets	12,275,600	12,105,300
Fixed assets
Leasehold improvements	81,500	81,500
Furniture, fixtures and equipment	178,500	169,800
Fixed assets, gross	260,000	251,300
Less: accumulated depreciation and amortization	236,500	214,800
Total fixed assets	23,500	36,500
Other assets
Long-term receivable	1,564,600	1,838,500
Operating lease right of use – building	70,600	17,600
Other assets	1,635,200	1,856,100
Total assets	13,934,300	13,997,900
Current liabilities
Accounts payable	100,200	27,500
Accrued expenses	134,200	94,600
Stock compensation payable	3,171,000	1,347,100
Operating lease liability – current	70,600	17,600
Total current liabilities	3,476,000	1,486,800
Other liabilities
Accrued expenses – non-current	109,400	128,600
Total other liabilities	109,400	128,600
Stockholders' equity
Common stock, $0.01 par value Authorized – 75,000,000 shares Issued and outstanding – 10,501,178 shares	105,000	105,000
Paid-in capital	21,647,100	21,647,100
Accumulated deficit	(11,403,200)	(9,369,600)
Total stockholders' equity	10,348,900	12,382,500
Total liabilities and stockholders' equity	$ 13,934,300	$ 13,997,900

v3.24.2.u1

Balance Sheets (Unaudited) (Parenthetical) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Allowance for credit losses	$ 12,000	$ 12,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	10,501,178	10,501,178
Common stock, shares outstanding	10,501,178	10,501,178

v3.24.2.u1

Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Operating Activities
Net income (loss)	$ (2,033,600)	$ 109,400
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization	21,700	18,200
Stock-based compensation	1,823,900
Interest income accrued	(92,300)
(Increase) decrease in assets
Accounts receivable	22,300	(242,100)
Inventory	128,700	118,300
Prepaid and other	17,000	(4,600)
Long-term receivables	220,900	338,500
Increase (decrease) in liabilities
Accounts payable and accrued expenses	146,100	(61,600)
Taxes on income		(138,800)
Net cash provided by operating activities	254,700	137,300
Investing Activities
Additions to fixed assets	(8,700)	(11,900)
Sale of short-term investment	2,162,600
Net cash provided by (used in) investing activities	2,153,900	(11,900)
Increase in cash and cash equivalents	2,408,600	125,400
Cash and Cash Equivalents
Beginning of year	2,269,200	5,337,800
End of period	$ 4,677,800	$ 5,463,200

v3.24.2.u1

Statements of Stockholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Balance – March 31, 2023 at Dec. 31, 2022	$ 92,500	$ 16,659,600	$ (7,933,700)	$ 8,818,400
Beginning balance, shares at Dec. 31, 2022	9,251,178
Net income			30,300	30,300
Ending balance, value at Mar. 31, 2023	$ 92,500	16,659,600	(7,903,400)	8,848,700
Ending balance, shares at Mar. 31, 2023	9,251,178
Net income			79,100	79,100
Ending balance, value at Jun. 30, 2023	$ 92,500	16,659,600	(7,824,300)	8,927,800
Ending balance, shares at Jun. 30, 2023	9,251,178
Balance – March 31, 2023 at Dec. 31, 2023	$ 105,000	21,647,100	(9,369,600)	12,382,500
Beginning balance, shares at Dec. 31, 2023	10,501,178
Net income			(1,028,200)	(1,028,200)
Ending balance, value at Mar. 31, 2024	$ 105,000	21,647,100	(10,397,800)	11,354,300
Ending balance, shares at Mar. 31, 2024	10,501,178
Net income			(1,005,400)	(1,005,400)
Ending balance, value at Jun. 30, 2024	$ 105,000	$ 21,647,100	$ (11,403,200)	$ 10,348,900
Ending balance, shares at Jun. 30, 2024	10,501,178

v3.24.2.u1

Pay vs Performance Disclosure - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Pay vs Performance Disclosure [Table]
Net Income (Loss)	$ (1,005,400)	$ 79,100	$ (2,033,600)	$ 109,400

v3.24.2.u1

Insider Trading Arrangements	6 Months Ended
	Jun. 30, 2024
Insider Trading Arrangements [Line Items]
Material Terms of Trading Arrangement	From time to time, certain of our executive officers and directors have, and we expect they will in the future, enter into, amend or terminate written trading arrangements pursuant to Rule 10b5-1 of the Securities and Exchange Act or otherwise.   For the quarter ended June 30, 2024, none of our officers or directors adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act and/or any “non-Rule 10b5-1 trading arrangement,” as defined in Item 408 of Regulation S-K.
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

v3.24.2.u1

Financial Statements	6 Months Ended
	Jun. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Financial Statements	Note 1. Financial Statements   The accompanying unaudited condensed financial statements have been prepared by Nocopi Technologies, Inc. (the “Company”). These statements include all adjustments (consisting only of normal recurring adjustments) which management believes necessary for a fair presentation of the statements and have been prepared on a consistent basis using the accounting policies described in Note 2 Significant Accounting Policies included in the Notes to Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission on March 25, 2024 (the “2023 Annual Report”). Certain financial information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the accompanying disclosures are adequate to make the information presented not misleading. The Notes to Financial Statements included in the 2023 Annual Report should be read in conjunction with the accompanying interim financial statements. The interim operating results for the three months and six months ended June 30, 2024 may not be necessarily indicative of the operating results expected for the full year.   The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 220 in reporting comprehensive income (loss).  Comprehensive income (loss) is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income (loss).  Since the Company has no items of other comprehensive income (loss), comprehensive income (loss) is equal to net income (loss).   Recently Issued Accounting Pronouncements Not Yet Adopted As of June 30, 2024, there are no recently issued accounting standards not yet adopted which would have a material effect on the Company's financial statements. Recently Adopted Accounting Pronouncements As of June 30, 2024 and for the period then ended, there are no recently adopted accounting standards that have a material effect on the Company's financial statements.

v3.24.2.u1

Stock Based Compensation	6 Months Ended
	Jun. 30, 2024
Compensation Related Costs [Abstract]
Stock Based Compensation	Note 2. Stock Based Compensation   The Company follows FASB ASC 718, Compensation – Stock Compensation, and uses the Black-Scholes option pricing model to calculate the grant-date fair value of an award. On June 17, 2024, the Company’s shareholders approved the Nocopi Technologies, Inc. 2024 Incentive Compensation Plan (the “2024 Plan”), which allows the Company to issue equity awards to directors, officers, other employees and consultants of the Company. However, as of June 30, 2024, no equity awards had been granted under the 2024 Plan, and as a result, there was no unrecognized portion of expense related to stock option grants under the 2024 Plan at June 30, 2024.   As part of an employment agreement, the Company granted an executive a one-time equity award of 1,000,000 restricted shares of the Company’s common stock valued at $3,580,000, fair value, which award shall vest in its entirety on August 18, 2024. The fair market value of the restricted stock award was determined based on the closing price of the Company’s common stock on the grant date and is being amortized on a straight-line basis to general and administrative expense as stock-based compensation over the one-year vesting term. The Company recorded stock-based compensation expense of $890,100 and $1,780,200 for the three and six months ended June 30, 2024, respectively. To the extent the Company has not established an employee equity compensation plan on or prior to August 18, 2024, the restricted shares may be converted, at the election of the executive, in full or in part, into cash compensation, at a rate of $3.58 per share of common stock, which was the fair market value of the common stock on October 10, 2023, which was the date the Board of Directors approved the grant. Since the issuance of the restricted stock can be settled in cash, the monthly amortization of the $3,580,000 fair value of the restricted stock grant is recorded as stock compensation payable. If the restricted stock grant is settled in shares of the Company’s common stock, then the stock compensation payable will be reclassified to additional paid in capital.

v3.24.2.u1

Cash and Cash Equivalents	6 Months Ended
	Jun. 30, 2024
Cash and Cash Equivalents [Abstract]
Cash and Cash Equivalents	Note 3. Cash and Cash Equivalents  Cash and cash equivalents                 June 30 2024     December 31 2023   Cash and cash equivalents                   Cash and money market funds   $ 4,677,800     $ 2,269,200    Cash and cash equivalents   $ 4,677,800     $ 2,269,200

v3.24.2.u1

Short-term Investments	6 Months Ended
	Jun. 30, 2024
Debt Disclosure [Abstract]
Short-term Investments	Note 4. Short-term Investments   Schedule of short term investments                 June 30     December 31       2024     2023   Short-term investments                    U.S. Treasury Bills   $ 5,823,000     $ 7,985,600      Short-term investments   $ 5,823,000     $ 7,985,600      Debt securities classified as held-to-maturity are reported at amortized cost.  Schedule of amortized cost and fair value of securities held to maturity                 Amortized Cost     Fair Value   U.S. Treasury Bills                 Due July 11, 2024     1,074,800       1,123,700   Due September 5, 2024     4,748,200       4,952,100       Total   $ 5,823,000     $ 6,075,800     Total interest income recognized for U.S. Treasury Bills was $182,800 and $239,600 for the six months ended June 30, 2024 and year ended December 31, 2023, respectively. Interest receivable was $252,300 and $160,000 for the six months ended June 30, 2024 and for the year ended December 31, 2023, respectively.

v3.24.2.u1

Long-term Receivables	6 Months Ended
	Jun. 30, 2024
Receivables [Abstract]
Long-term Receivables	Note 5. Long-term Receivables   As of June 30, 2024, the Company had long-term receivables of $1,564,600 from two of the three licensees representing the present value of fixed guaranteed royalty payments that will be payable over varying periods of two through five years that commenced in the second half of 2022 and terminate in the second quarter of 2028. The fixed guaranteed royalty payments result from amendments to license agreements with two existing licensees and a license agreement with a new licensee. The receivable represents the present value of the fixed minimum annual payments due under the license agreements, discounted at the Company's incremental borrowing rate of 4%.    The three agreements grant licenses for the use of certain patented ink technology as it exists at the time that it is granted which is considered functional intellectual property. Under Topic 606, a performance obligation to transfer a license for functional intellectual property is satisfied at a point in time and the fixed consideration could be recognized upfront when the Company transfers control of the licensee if certain criteria are met. Specifically, the minimum royalty guarantee could be recognized upfront if the following conditions are met:     · The royalty payment is fixed or determinable     · Collection of the royalty payment is considered probable     · The licensee has the ability to benefit from the licensed technology   The Company determined that the above conditions were met upon execution of the new 2022 license agreements and recognized $2,810,600 of royalty revenue net of imputed interest of $131,300 for the year ended December 31, 2022. The commissions are payable over the term of the license agreements and are due when payments are received by the Company. As of June 30, 2024, the accrued commission payable balance was approximately $150,300.   The current portion of the three license agreements in the amount of $585,000 and $624,600, is included in accounts receivable on the balance sheets as of June 30, 2024 and December 31, 2023, respectively.     The following table summarizes the future minimum payments due under the three license agreements as of June 30, 2024:  Schedule of future minimum payments         Year Ending December 31:           2024     $ 321,000     2025       570,000     2026       570,000     2027       557,500     2028       260,000        Total     $ 2,278,500     The Company has evaluated the collectability of the long-term receivables and believes them to be fully collectible as of June 30, 2024. However, there can be no assurance that the receivables will not be impaired in the future due to changes in the licensees’ financial condition or other factors.    The long-term receivables are recorded at its present value as of June 30, 2024, and will be amortized over the term of the license agreements using the effective interest method. The unamortized balance of the long-term receivables as of June 30, 2024 is $1,564,600.

v3.24.2.u1

Line of Credit	6 Months Ended
	Jun. 30, 2024
Line Of Credit
Line of Credit	Note 6. Line of Credit   In November 2018, the Company negotiated a $150,000 revolving line of credit with a bank to provide a source of working capital, if required. The line of credit is secured by all the assets of the Company and bears interest at the bank’s prime rate for a period of one year and its prime rate plus 1.5% thereafter. The line of credit is subject to an annual review and quiet period. There were no borrowings under the line of credit since its inception and the line of credit was terminated on July 13, 2023.

v3.24.2.u1

Stockholders’ Equity	6 Months Ended
	Jun. 30, 2024
Equity [Abstract]
Stockholders’ Equity	Note 7. Stockholders’ Equity On September 11, 2023 the Company entered into a stock purchase agreement in connection with a private placement for total gross proceeds of $5.0 million. The stock purchase agreement provided for the issuance of an aggregate of 1,250,000 shares of the Company’s common stock to an investor at a purchase price of $4.00 per share. In addition, as consideration for general advisory services until the third anniversary, the Company agreed to issue an aggregate total of 65,790 shares of common stock with a total fair market value on the date of grant of $263,160, which shares shall be issued as follows: one-third (21,930 shares) on September 11, 2024, one-third (21,930 shares) on September 11, 2025 and one-third (21,930 shares) on September 11, 2026. The Company expenses the value of the stock grant, which is determined to be the fair market value of the shares at the date of grant, straight-line over the term of the advisory agreement. For the three and six months ended June 30, 2024, the Company recognized $36,800 and $73,700, respectively of consulting expense associated with this issuance. On September 11, 2023, the sale pursuant to the Purchase Agreement closed. No placement fees or commissions were paid in connection with this transaction. At June 30, 2024, the Company had no warrants outstanding.

v3.24.2.u1

Income Taxes	6 Months Ended
	Jun. 30, 2024
Income Tax Disclosure [Abstract]
Income Taxes	Note 8. Income Taxes   At June 30, 2024, there was no income tax benefit for the net losses for the six months ended June 30, 2024 due to the recording of a full valuation allowance since it is more likely than not that that the realization of the net deferred tax assets would not be realized. At June 30, 2023 the Company had federal and state taxable income of approximately $138,400 and $88,400, respectively. State income taxes in the six months ended June 30, 2023 resulted from limitations placed on income tax net operating loss deductions by the Commonwealth of Pennsylvania.   The components for federal and state income tax expense are:  Schedule of federal and state income tax expense                 Six Months ended June 30       2024     2022   Current federal taxes   $ —     $ 29,100   Current state taxes     —       8,800   Income tax expense (benefit)   $ —     $ 37,900     There was no change in unrecognized tax benefits during the period ended June 30, 2024 and there was no accrual for uncertain tax positions as of June 30, 2024. Tax years from 2021 through 2023 remain subject to examination by U.S. federal and state jurisdictions. The Federal net operating loss carryforward is $438,891 and the Pennsylvania State net operating loss carryforward is currently $2,023,257 as of June 30, 2024.

v3.24.2.u1

Earnings (Loss) per Share	6 Months Ended
	Jun. 30, 2024
Net income (loss) per common share
Earnings (Loss) per Share	Note 9. Earnings (Loss) per Share   In accordance with FASB ASC 260, Earnings per Share, basic earnings (loss) per common share is computed using net earnings (loss) divided by the weighted average number of common shares outstanding for the periods presented. Diluted earnings (loss) per share are computed using weighted average number of common shares plus dilutive common share equivalents outstanding during the period. Since the Company did not have any common stock equivalents outstanding as of June 30, 2024 and June 30, 2023, basic and diluted earnings (loss) per share were the same.

v3.24.2.u1

Major Customer and Geographic Informatio	6 Months Ended
	Jun. 30, 2024
Segment Reporting [Abstract]
Major Customer and Geographic Informatio	Note 10. Major Customer and Geographic Information   The Company’s revenues, expressed as a percentage of total revenues, from non-affiliated customers that equaled 10% or more of the Company’s total revenues were:  Schedule of revenues as percentage of revenue                             Three Months ended June 30     Six Months ended June 30       2024     2023     2024     2023   Customer A     69 %     67 %     69 %     69 % Customer B     14 %     20 %     15 %     16 %   The Company’s non-affiliate customers whose individual balances amounted to more than 10% of the Company’s net accounts receivable, expressed as a percentage of net accounts receivable, were: Schedule of non-affiliated customers with accounts receivable                  June 30     December 31       2024     2023   Customer A     —       —   Customer B     81 %     82 %   The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company also maintains allowances for potential credit losses. The loss of a major customer could have a material adverse effect on the Company’s business operations and financial condition.   The Company’s revenues by geographic region are as follows:  Schedule of revenue by geographic region                             Three Months ended June 30     Six Months ended June 30       2024     2023     2024     2023   North America   $ 87,300     $ 145,800     $ 165,000     $ 273,600   South America     600       —       600       —   Asia     357,300       435,200       659,300       876,700   Australia     13,800       18,200       32,400       41,000       $ 459,000     $ 599,200     $ 857,300     $ 1,191,300

v3.24.2.u1

Leases	6 Months Ended
	Jun. 30, 2024
Leases
Leases	Note 11. Leases   The Company conducts its operations in leased facilities under a non-cancelable operating lease, which was originally set to expire in April 2024. The lease has been extended for 13 months for a new term that began on May 1, 2024 and will expire on May 31, 2025.   Due to the adoption of the new lease standard under the optional transition method which allows the entity to apply the new lease standard at the adoption date, the Company has capitalized the present value of the minimum lease payments commencing May 1, 2024, using an estimated incremental borrowing rate of 6.5%. The minimum lease payments do not include common area annual expenses which are considered to be non-lease components.   As of May 1, 2024 the operating lease right-of-use asset and operating lease liability amounted to $83,046 with no cumulative-effect adjustment to the opening balance of accumulated deficit.   There are no other material operating leases. The Company has elected not to recognize right-of-use assets and lease liabilities arising from short-term leases.   Total lease expense under operating leases for the three and six months ended June 30, 2024 was $17,600 and $31,000, respectively. Total lease expense under operating leases for the three and six months ended June 30, 2023 was $13,300 and $26,700, respectively.   Maturities of current lease liabilities as of June 30, 2024 are as follows:  Schedule of maturities of lease liabilities               Operating Leases     Period ending December 31             2024       39,600     2025       33,000     Total lease payments       72,600     Less imputed interest       (2,000 )   Total     $ 70,600

v3.24.2.u1

Cash and Cash Equivalents (Tables)	6 Months Ended
	Jun. 30, 2024
Cash and Cash Equivalents [Abstract]
Cash and cash equivalents	Cash and cash equivalents                 June 30 2024     December 31 2023   Cash and cash equivalents                   Cash and money market funds   $ 4,677,800     $ 2,269,200    Cash and cash equivalents   $ 4,677,800     $ 2,269,200

v3.24.2.u1

Short-term Investments (Tables)	6 Months Ended
	Jun. 30, 2024
Debt Disclosure [Abstract]
Schedule of short term investments	Schedule of short term investments                 June 30     December 31       2024     2023   Short-term investments                    U.S. Treasury Bills   $ 5,823,000     $ 7,985,600      Short-term investments   $ 5,823,000     $ 7,985,600
Schedule of amortized cost and fair value of securities held to maturity	Schedule of amortized cost and fair value of securities held to maturity                 Amortized Cost     Fair Value   U.S. Treasury Bills                 Due July 11, 2024     1,074,800       1,123,700   Due September 5, 2024     4,748,200       4,952,100       Total   $ 5,823,000     $ 6,075,800

v3.24.2.u1

Long-term Receivables (Tables)	6 Months Ended
	Jun. 30, 2024
Receivables [Abstract]
Schedule of future minimum payments	Schedule of future minimum payments         Year Ending December 31:           2024     $ 321,000     2025       570,000     2026       570,000     2027       557,500     2028       260,000        Total     $ 2,278,500

v3.24.2.u1

Income Taxes (Tables)	6 Months Ended
	Jun. 30, 2024
Income Tax Disclosure [Abstract]
Schedule of federal and state income tax expense	Schedule of federal and state income tax expense                 Six Months ended June 30       2024     2022   Current federal taxes   $ —     $ 29,100   Current state taxes     —       8,800   Income tax expense (benefit)   $ —     $ 37,900

v3.24.2.u1

Major Customer and Geographic Informatio (Tables)	6 Months Ended
	Jun. 30, 2024
Segment Reporting [Abstract]
Schedule of revenues as percentage of revenue	Schedule of revenues as percentage of revenue                             Three Months ended June 30     Six Months ended June 30       2024     2023     2024     2023   Customer A     69 %     67 %     69 %     69 % Customer B     14 %     20 %     15 %     16 %
Schedule of non-affiliated customers with accounts receivable	Schedule of non-affiliated customers with accounts receivable                  June 30     December 31       2024     2023   Customer A     —       —   Customer B     81 %     82 %
Schedule of revenue by geographic region	Schedule of revenue by geographic region                             Three Months ended June 30     Six Months ended June 30       2024     2023     2024     2023   North America   $ 87,300     $ 145,800     $ 165,000     $ 273,600   South America     600       —       600       —   Asia     357,300       435,200       659,300       876,700   Australia     13,800       18,200       32,400       41,000       $ 459,000     $ 599,200     $ 857,300     $ 1,191,300

v3.24.2.u1

Leases (Tables)	6 Months Ended
	Jun. 30, 2024
Leases
Schedule of maturities of lease liabilities	Schedule of maturities of lease liabilities               Operating Leases     Period ending December 31             2024       39,600     2025       33,000     Total lease payments       72,600     Less imputed interest       (2,000 )   Total     $ 70,600

v3.24.2.u1

Stock Based Compensation (Details Narrative) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2024	Aug. 18, 2024
Unrecognized portion of expense related to stock option grants	$ 0	$ 0
Stock based compensation expense	$ 890,100	1,780,200
Amortization		$ 3,580,000
Common Stock [Member]
Restricted shares		1,000,000
Restricted value		$ 3,580,000
Common stock price per share			$ 3.58

v3.24.2.u1

Cash and Cash Equivalents (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Cash and Cash Equivalents [Abstract]
Cash and money market funds	$ 4,677,800	$ 2,269,200
Cash and cash equivalents	$ 4,677,800	$ 2,269,200

v3.24.2.u1

Short-term Investments (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Short-term investments
U.S. Treasury Bills	$ 5,823,000	$ 7,985,600
Short-term investments	$ 5,823,000	$ 7,985,600

v3.24.2.u1

Short-term Investments (Details 1)	Jun. 30, 2024 USD ($)
Cash and Cash Equivalents [Line Items]
Amortized Cost	$ 5,823,000
Fair Value	6,075,800
Due July [Member]
Cash and Cash Equivalents [Line Items]
Amortized Cost	1,074,800
Fair Value	1,123,700
Due September [Member]
Cash and Cash Equivalents [Line Items]
Amortized Cost	4,748,200
Fair Value	$ 4,952,100

v3.24.2.u1

Short-term Investments (Details Narrative) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Debt Disclosure [Abstract]
U.S Treasury bills interest income	$ 182,800	$ 239,600
Interest receivable	$ 252,300	$ 160,000

v3.24.2.u1

Long-term Receivables (Details)	Jun. 30, 2024 USD ($)
Receivables [Abstract]
2024	$ 321,000
2025	570,000
2026	570,000
2027	557,500
2028	260,000
Total	$ 2,278,500

v3.24.2.u1

Long-term Receivables (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2022	Jun. 30, 2024	Dec. 31, 2023
Receivables [Abstract]
Long-term receivables		$ 1,564,600	$ 1,838,500
Incremental borrowing rate		4.00%
Royalty revenue	$ 2,810,600
Imputed interest	$ 131,300
Accrued commission payable		$ 150,300
Accounts receivable, current		585,000	$ 624,600
Accounts receivable, long-term		$ 1,564,600

v3.24.2.u1

Line of Credit (Details Narrative)	6 Months Ended
	Jun. 30, 2024 USD ($)
Line Of Credit
Line of credit facility, maximum borrowing capacity	$ 150,000
Line of credit facility, interest rate description	The line of credit is secured by all the assets of the Company and bears interest at the bank’s prime rate for a period of one year and its prime rate plus 1.5% thereafter.

v3.24.2.u1

Stockholders’ Equity (Details Narrative) - USD ($)		3 Months Ended	6 Months Ended
	Sep. 11, 2023	Jun. 30, 2024	Jun. 30, 2024
Subsidiary, Sale of Stock [Line Items]
Proceeds from Issuance or Sale of Equity	$ 5,000,000
Aggregate shares issued	65,790
Fair market value	$ 263,160
Consulting expense		$ 36,800	$ 73,700
Warrants outstanding		0	0
Private Placement [Member]
Subsidiary, Sale of Stock [Line Items]
Issuance of shares	1,250,000
Share price	$ 4.00

v3.24.2.u1

Income Taxes (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Income Tax Disclosure [Abstract]
Current federal tax benefit				$ 29,100
Current state tax benefit				8,800
Income tax expense (benefit)		$ 27,400		$ 37,900

v3.24.2.u1

Income Taxes (Details Narrative)	Jun. 30, 2024 USD ($)
Effective Income Tax Rate Reconciliation [Line Items]
Unrecognized tax benefits	$ 0
Accrual for uncertain tax positions	0
Domestic Tax Jurisdiction [Member]
Effective Income Tax Rate Reconciliation [Line Items]
Net operating loss carryforwards	438,891
State and Local Jurisdiction [Member]
Effective Income Tax Rate Reconciliation [Line Items]
Net operating loss carryforwards	$ 2,023,257

v3.24.2.u1

Major Customer and Geographic Information (Details) - Revenue Benchmark [Member] - Customer Concentration Risk [Member]	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Customer A [Member]
Revenue, Major Customer [Line Items]
Risk percentage	69.00%	67.00%	69.00%	69.00%
Customer B [Member]
Revenue, Major Customer [Line Items]
Risk percentage	14.00%	20.00%	15.00%	16.00%

v3.24.2.u1

Major Customer and Geographic Information (Details 1) - Accounts Receivable [Member] - Customer Concentration Risk [Member]	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Customer A [Member]
Revenue, Major Customer [Line Items]
Risk percentage
Customer B [Member]
Revenue, Major Customer [Line Items]
Risk percentage	81.00%	82.00%

v3.24.2.u1

Major Customer and Geographic Information (Details 2) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 459,000	$ 599,200	$ 857,300	$ 1,191,300
North America [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	87,300	145,800	165,000	273,600
South America [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	600		600
Asia [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	357,300	435,200	659,300	876,700
AUSTRALIA
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 13,800	$ 18,200	$ 32,400	$ 41,000

v3.24.2.u1

Leases (Details) - USD ($)	Jun. 30, 2024	May 01, 2024
Leases
2024	$ 39,600
2025	33,000
Total lease payments	72,600
Less imputed interest	(2,000)
Total	$ 70,600	$ 83,046

v3.24.2.u1

Leases (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	May 01, 2024	Dec. 31, 2023
Leases
Incremental borrowing rate					6.50%
Operating lease right-of-use asset	$ 70,600		$ 70,600		$ 83,046	$ 17,600
Operating lease liability	70,600		70,600		$ 83,046
Operating lease cost	$ 17,600	$ 13,300	$ 31,000	$ 26,700

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